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Tariffication with Supply Management: The Case of the U.S.-Canadian Chicken Trade

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  • Moschini, GianCarlo
  • Meilke, Karl D.

Abstract

This paper considers the conversion of import quotas into tariffs, as may arise in the current round of General Agreement on Tariffs and Trade (GATT) negotiations, when the internal market of the country imposing the quota is not perfectly competitive. This case is illustrated by the chicken market in Canada, where producers exercise market power by restricting supply. In this setting, tariffs and import quotas are not equivalent. If a tariff reflecting current price differences between Canada and the United States replaced the import quota system, the price in Canada would be unchanged but chicken imports would be driven to zero. On the other hand, the tariff that would preserve chicken imports at their current levels upon abolition of the import quota is much lower, and would result in a considerable decline in the Canadian chicken price.
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Suggested Citation

  • Moschini, GianCarlo & Meilke, Karl D., 1991. "Tariffication with Supply Management: The Case of the U.S.-Canadian Chicken Trade," Staff General Research Papers Archive 821, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:821
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    Cited by:

    1. Peter Slade, 2018. "The Effects of Pricing Canadian Livestock Emissions," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 66(2), pages 305-329, June.
    2. Karl D. Meilke & Don McClatchy & Harry de Gorter, 1996. "Challenges in quantitative economic analysis in support of multilateral trade negotiations," Agricultural Economics, International Association of Agricultural Economists, vol. 14(3), pages 185-200, August.
    3. Eales, James S., 1996. "A Symmetric Approach To Canadian Meat Demand Estimation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(2), pages 1-13, December.
    4. Sumner, Daniel A. & Hallstrom, Daniel G., 1997. "Commodity Policy Compatibility With Free Trade Agreements," Proceedings of the 3rd Agricultural and Food Policy Systems Information Workshop, 1997: Harmonization\Convergence\Compatibility in Agriculture and Agri-Food Policy: Canada, United States and Mexico 16914, Farm Foundation, Agricultural and Food Policy Systems Information Workshops.
    5. Gervais, Jean-Philippe, 1999. "Optimal trade policy, time consistency and uncertainty in an oligopsonistic world market," ISU General Staff Papers 1999010108000013564, Iowa State University, Department of Economics.
    6. Colin A. Carter & Pierre Mérel, 2016. "Hidden costs of supply management in a small market," Canadian Journal of Economics, Canadian Economics Association, vol. 49(2), pages 555-588, May.
    7. Schmitz, Andrew, 1995. "Political Economic Analysis in Agricultural Trade and Competitiveness," 1994 Conference, August 22-29, 1994, Harare, Zimbabwe 183393, International Association of Agricultural Economists.
    8. Schmitz Troy G. & Schmitz Andrew, 2002. "Food Supply Management and Tariffication: A Game Theoretic Approach," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-21, October.
    9. Cymbal, W. & Veeman, M.M., 1994. "Canadian Agriculture and GATT: An Economic Analysis of Article XI," Project Report Series 232387, University of Alberta, Department of Resource Economics and Environmental Sociology.

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